Misplaced Pages

Revision as of 14:48, 5 August 2009

Part of a series on
Economics
History Outline Index
Branches and classifications Applied Econometrics Heterodox International Micro / Macro Mainstream Mathematical Methodology Political JEL classification codes
Concepts, theory and techniques Economic systems Economic growth Market National accounting Experimental economics Computational economics Game theory Operations research Middle income trap Industrial complex
By application Agricultural Behavioral Business Cultural Democracy Demographic Development Digitization Ecological Education Engineering Environmental Evolutionary Expeditionary Feminist Financial Geographical Happiness Health Historical Humanistic Industrial organization Information Institutional Knowledge Labour Law Managerial Monetary Natural resource Organizational Participation Personnel Planning Policy Public Public choice / Social choice theory Regional Rural Service Socio Sociological Solidarity Statistics Urban Welfare
Notable economists de Mandeville Quesnay Smith Malthus Say Ricardo von Thünen List Bastiat Cournot Mill Gossen Marx Walras Jevons George Menger Marshall Edgeworth Clark Pareto von Böhm-Bawerk von Wieser Veblen Fisher Pigou Heckscher von Mises Schumpeter Keynes Knight Polanyi Frisch Sraffa Myrdal Hayek Kalecki Röpke Kuznets Tinbergen Robinson von Neumann Hicks Lange Leontief Galbraith Koopmans Schumacher Friedman Samuelson Simon Buchanan Arrow Baumol Solow Rothbard Greenspan Sowell Becker Ostrom Sen Lucas Stiglitz Thaler Hoppe Krugman Piketty more
Lists Glossary Economists Publications (journals) Schools
Business portal Money portal
v t e

A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things. Markets vary in size, range, geographic scale, location, types and variety of human communities, as well as the types of goods and services traded. Some examples include local farmers’ markets held in town squares or parking lots, shopping centers and shopping malls, international currency and commodity markets, legally created markets such as for pollution permits, and illegal markets such as the market for illicit drugs.

In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and information. The exchange of goods or services for money is a transaction. Market participants consist of all the buyers and sellers of a good who influence its price. This influence is a major study of economics and has given rise to several theories and models concerning the basic market forces of supply and demand. There are two roles in markets, buyers and sellers. The market facilitates trade and enables the distribution and allocation of resources in a society. Markets allow any tradable item to be evaluated and priced. A market emerges more or less spontaneously or is constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods.

Historically, markets originated in physical marketplaces which would often develop into — or from — small communities, towns and cities.

Types of markets

Although many markets exist in the traditional sense — such as a marketplace — there are various other types of markets and various organizational structures to assist their functions. The nature of business transactions could define markets.

Financial markets

Financial markets facilitate the exchange of liquid assets. Most investors prefer investing in two markets, the stock markets and the bond markets. NYSE, AMEX, and the NASDAQ are the most common stock markets in the US. Futures markets, where contracts are exchanged regarding the future delivery of goods are often an outgrowth of general commodity markets.

Currency markets are used to trade one currency for another, and are often used for speculation on currency exchange rates.

The money market is the name for the global market for lending and borrowing.

Prediction markets

Prediction markets are a type of speculative market in which the goods exchanged are futures on the occurrence of certain events. They apply the market dynamics to facilitate information aggregation.

Organization of markets

A market can be organized as an auction, as a private electronic market, as a shopping center, as a complex institution such as a stock market, and as an informal discussion between two individuals.

Markets of varying types can spontaneously arise whenever a party has interest in a good or service that some other party can provide. Hence there can be a market for cigarettes in correctional facilities, another for chewing gum in a playground, and yet another for contracts for the future delivery of a commodity. There can be black markets, where a good is exchanged illegally and virtual markets, such as eBay, in which buyers and sellers do not physically interact during negotiation. There can also be markets for goods under a command economy despite pressure to repress them.

Mechanisms of markets

In economics, a market that runs under laissez-faire policies is a free market. It is "free" in the sense that the government makes no attempt to intervene through taxes, subsidies, minimum wages, price ceilings, etc. Market prices may be distorted by a seller or sellers with monopoly power, or a buyer with monopsony power. Such price distortions can have an adverse effect on market participant's welfare and reduce the efficiency of market outcomes. Also, the level of organization or negotiation power of buyers, markedly affects the functioning of the market. Markets where price negotiations meet equilibrium though still do not arrive at desired outcomes for both sides are said to experience market failure.

Study of markets

The study of actual existing markets made up of persons interacting in space and place in diverse ways is widely seen as an antidote to abstract and all-encompassing concepts of “the market” and has historical precedent in the works of Ferdinand Braudel and Karl Polanyi. The latter term is now generally used in two ways. First, to denote the abstract mechanisms whereby supply and demand confront each other and deals are made. In its place, reference to markets reflects ordinary experience and the places, processes and institutions in which exchanges occurs. Second, the market is often used to signify an integrated, all-encompassing and cohesive capitalist world economy. A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets. . For economic geographers, reference to regional, local, or commodity specific markets can serve to undermine assumptions of global integration, and highlight geographic variations in the structures, institutions, histories, path dependencies, forms of interaction and modes of self-understanding of agents in different spheres of market exchange Reference to actual markets can show capitalism not as a totalizing force or completely encompassing mode of economic activity, but rather as “a set of economic practices scattered over a landscape, rather than a systemic concentration of power”

C. B. Macpherson identifies an underlying model of the market underlying Anglo-American liberal-democratic political economy and philosophy in the seventeenth and eighteenth centuries: Persons are cast as self-interested individuals, who enter into contractual relations with other such individuals, concerning the exchange of goods or personal capacities cast as commodities, with the motive of maximizing pecuniary interest. The state and its governance systems are cast as outside of this framework.). This model came to dominant economic thinking in the later nineteenth century, as economists such as Ricardo, Mill, Jevons, Walras and later neo-classical economics shifted from reference to geographically located marketplaces to an abstract “market” . This tradition is continued in contemporary neoliberalism, where the market is held up as optimal for wealth creation and human freedom, and the states’ role imagined as minimal, reduced to that of upholding and keeping stable property rights, contract, and money supply. This allowed for boilerplate economic and institutional restructuring under structural adjustment and post-Communist reconstruction.

Similar formalism occurs in a wide variety of social democratic and Marxist discourses that situate political action as antagonistic to the market. In particular, commodification theorists such as Georg Lukacs insist that market relations necessarily lead to undue exploitation of labour and so need to be opposed in toto. ,). Pierre Bourdieu has suggested the market model is becoming self-realizing, in virtue of its wide acceptance in national and international institutions through the 1990s. ). The formalist conception faces a number of insuperable difficulties, concerning the putatively global scope of the market to cover the entire Earth, in terms of penetration of particular economies, and in terms of whether particular claims about the subjects (individuals with pecuniary interest), objects (commodities), and modes of exchange (transactions) apply to any actually existing markets.

A central theme of empirical analyses is the variation and proliferation of types of markets since the rise of capitalism and global scale economies. The Regulation School stresses the ways in which developed capitalist countries have implemented varying degrees and types of environmental, economic, and social regulation, taxation and public spending, fiscal policy and government provisioning of goods, all of which have transformed markets in uneven and geographical varied ways and created a variety of mixed economies. Drawing on concepts of institutional variance and path dependency, varieties of capitalism theorists (such as Hall and Soskice) identify two dominant modes of economic ordering in the developed capitalist countries, “coordinated market economies” such as Germany and Japan, and an Anglo-American “liberal market economies”. However, such approaches imply that the Anglo-American liberal market economies in fact operate in a matter close to the abstract notion of “the market”. While Anglo-American countries have seen increasing introduction of neo-liberal forms of economic ordering, this has not lead to simple convergence, but rather a variety of hybrid institutional orderings. . Rather, a variety of new markets have emerged, such as for carbon trading or rights to pollute. In some cases, such as emerging markets for water, different forms of privatization of different aspects of previously state run infrastructure have created hybrid private-public formations and graded degrees of commodification, commercialization and privatization

Problematic for market formalism is the relationship between formal capitalist economic processes and a variety of alternative forms, ranging from semi-feudal and peasant economies widely operative in many developing economies, to informal markets, barter systems, worker cooperatives, or illegal trades that occur in most developed countries. Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth century did not merely result in the quashing of former social economic institutions. Rather, various modes of articulation arose between transformed and hybridized local traditions and social practices and the emergence world economy. So called capitalist markets in fact include and depend on a wide range of geographically situated economic practices that do not follow the market model. Economies are thus hybrids of market and non-market elements

Helpful here is J. K. Gibson-Graham’s complex topology of the diversity of contemporary market economies describing different types of transactions, labour, and economic agents. Transactions can occur in underground markets (such as for marijuana) or be artificially protected (such as for patents). They can cover the sale of public goods under privatization schemes to co-operative exchanges and occur under varying degrees of monopoly power and state regulation. Likewise, there are a wide variety of economic agents, which engage in different types of transactions on different terms: One cannot assume the practices of a religious kindergarten, multinational corporation, state enterprise, or community-based cooperative can be subsumed under the same logic of calculability (pp. 53–78). This emphasis on proliferation can also be contrasted with continuing scholarly attempts to show underlying cohesive and structural similarities to different markets.

A prominent entry point for challenging the market model’s applicability concerns exchange transactions and the homo economicus assumption of self-interest maximization. There are now a number of streams of economic sociological analysis of markets focusing on the role of the social in transactions, and the ways transactions involve social networks and relations of trust, cooperation and other bonds. . Economic geographers in turn draw attention to the ways in exchange transactions occur against the backdrop of institutional, social and geographic processes, including class relations, uneven development, and historically contingent path dependencies . A useful schema is provided by Michel Callon’s concept of framing: Each economic act or transaction occurs against, incorporates and also re-performs a geographically and cultural specific complex of social histories, institutional arrangements, rules and connections. These network relations are simultaneously bracketed, so that persons and transactions may be disentangled from thick social bonds. The character of calculability is imposed upon agents as they come to work in markets and are “formatted” as calculative agencies. Market exchanges contain a history of struggle and contestation that produced actors predisposed to exchange under certain sets of rules. As such market transactions can never be disembedded from social and geographic relations and there is no sense to talking of degrees of embeddedness and disembeddeness .

An emerging theme worthy of further study is the interrelationship, interpenetrability and variations of concepts of persons, commodities, and modes of exchange under particular market formations. This is most pronounced in recent movement towards post-structuralist theorizing that draws on Foucault and Actor Network Theory and stress relational aspects of personhood, and dependence and integration into networks and practical systems. Commodity network approaches further both deconstruct and show alternatives to the market models concept of commodities. Here, both researchers and market actors are understood as reframing commodities in terms of processes and social and ecological relationships. Rather than a mere objectification of things traded, the complex network relationships of exchange in different markets calls on agents to alternatively deconstruct or “get with” the fetish of commodities. Gibson-Graham thus read a variety of alternative markets, for fair trade and organic foods, or those using Local Exchange Trading Systems as not only contributing to proliferation, but also forging new modes of ethical exchange and economic subjectivities.

Most markets are regulated by state wide laws and regulations. While barter markets exist, most markets use currency or some other form of money.

Gallery

See also

• Agricultural marketing
• Farmers' market
• Financial market
• Grocery store
• Marketplace
• Market square
• Market town
• Market customization
• Market economy
• Market microstructure
• Media market
• Stock market
• Street market
• Supermarket
• Wholesale marketing

Notes

1. Sullivan, arthur (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 28. ISBN 0-13-063085-3. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)CS1 maint: location (link)
2. Callon, M. (1998) "Introduction: The Embeddedness of Economic Markets in Economics." In The Laws of the Markets, edited by Michel Callon. Basic Blackwell/The Sociological Review pp 1-57 1998, p.2).
3. Swedberg, Richard (1994) “Markets as Social Structures” The Handbook of Economic Sociology. Ed. Neil Smelser and Richard Swedberg. Princeton University Press. 255-2821994, p. 258)
4. Peck, J. (2005) “Economic Geographies in Space” Economic Geography 81(2) 129-175.
5. (Gibson-Graham, J.K. (2006) Postcapitalist Politics. University of Minnesota Press,. p.2).
6. (MacPherson, C.B. (1962) The Political Theory of Possessive Individualism: From Hobbes to Locke. Oxford Clarendon Press. p.3
7. (Swedberg, 1994, p. 258
8. Harvey, David (2005) A Short History of Neoliberalism Oxford University Press.
9. Lukács, Georg. (1971) History and Class Consciousness. Trans. Rodney Livingstone. Merlin Press. London.p. 87
10. Bourdieu, Pierre (1999) Acts of Resistance: Against the Tyranny of the Market. The New Press.p. 95
11. Peck, supra, p. 154)
12. Bakker, Karen (2005) “Neoliberalizing Nature?: Market Environmentalism in water supply in England and Wales” Annals of the Association of American Geographers 95 (3), 542-565
13. (Mitchell, Timothy (2002) Rule of Experts. University of California Pressp. 270; Gibson-Graham 2006, supra pp. 53-78)
14. ^ Swedberg, 1994, p. 267
15. Martin, Ron (2000) “Institutional Approaches in Economic Geography” Handbook of Economic Geography. Ed. Eric Sheppard and Trevor J. Barnes. Blackwell Publishers.Peck, 2005
16. Callon, 1998; Mitchell, 2002, p. 291,
17. Hughes, Alex (2005) “Geographies of Exchange and Circulation: alternative trading spaces” Progress in Human Geography

References

• Bakker, Karen (2005) “Neoliberalizing Nature?: Market Environmentalism in water supply in England and Wales” Annals of the Association of American Geographers 95 (3), 542-565.
• Bourdieu, Pierre (1999) Acts of Resistance: Against the Tyranny of the Market. The New Press.
• Callon, Michel (1998) "Introduction: The Embeddedness of Economic Markets in Economics." In The Laws of the Markets, edited by Michel Callon. Basic Blackwell/The Sociological Review pp 1–57
• Gibson-Graham, J.K. (2006) Postcapitalist Politics. University of Minnesota Press,.
• Harvey, David (2005) A Short History of Neoliberalism Oxford University Press.
• Hughes, Alex (2005) “Geographies of Exchange and Circulation: alternative trading spaces” Progress in Human Geography
• Lukács, Georg. (1971) History and Class Consciousness. Trans. Rodney Livingstone. Merlin Press. London.
• MacPherson, C.B. (1962) The Political Theory of Possessive Individualism: From Hobbes to Locke. Oxford Clarendon Press.
• Marshall, A. (1961). Principles of Economics. C. W. Guillebaud, Ed. 2 Vol. London: Macmillan.
• Martin, Ron (2000) “Institutional Approaches in Economic Geography” Handbook of Economic Geography. Ed. Eric Sheppard and Trevor J. Barnes. Blackwell Publishers.
• Mitchell, Timothy (2002) Rule of Experts University of California Press.;
• Peck, J. (2005) “Economic Geographies in Space” Economic Geography 81(2) 129-175
• Swedberg, Richard (1994) “Markets as Social Structures” The Handbook of Economic Sociology. Ed. Neil Smelser and Richard Swedberg. Princeton University Press. 255-282

Sources

• Microeconomics by Robert S. Pindyck, Daniel L. Rubinfeld

External links

• China yiwu market,The world's largest wholesalers market.
• Qualitionary - Legal Definitions - Market
• The EU's Market Access Strategy in a Changing Global Economy
• China wholesale market directory

• Economics terminology
• Markets
• Anthropology